Aussie Budget Hurting From Global Crisis

Published on Business Times:

• SYDNEY: The global economic crisis and China's slowdown will punch a A$115 billion (A$1 = RM2.32) hole in Australia's budget over the next four years, Prime Minister Kevin Rudd said yesterday.
  
  But despite the budget being plunged into deficit, Rudd flagged more government spending in a new stimulus package, pledging "to move heaven and earth" to support growth in the economy.
  
  "The truth is that the global recession in general and the collapse in China's growth in particular, has produced a US$115 billion (US$1 = RM3.61) fall in Australian tax receipts to the government," he told reporters in Canberra.
  
  "That figure equals about half the government's total tax receipts in a given year, although of course that figure ... is spread across the forward estimates (covering four years)."
  
  Last May the budget had been forecast to be A$21.7 billion in surplus. But the gravity of the global crisis provided the country with a stark choice of either acting to boost the economy or "allowing the jobless queue to grow even longer", he said.
  
  "This government will intervene," he said, dismissing opposition objections to more spending. "We will do so decisively with further action to support jobs and growth."
  
  The government, which pumped A$10.4 billion into the economy in December to boost consumer spending, will announce a second stimulus package in the new parliamentary session beginning today, he said.
  
  The projected tax receipt loss of US$115 billion is US$75 billion higher than the shortfall estimated in the government's mid-year outlook three months ago.
  
  The further drop includes US$50 billion in company tax receipts, 13 billion in income tax, 10 billion in sales tax and two billion in other assorted taxes.
  
  Globally, six of Australia's top 10 trading partners are in recession and the halving of China's growth alone would result in a US$15 billion loss to Australia's economy in 2009/2010, Rudd said.
  
  Demand in China and other Asian countries for Australian resources such as coal and iron ore had underpinned an economic boom for a decade, allowing a long series of budget surpluses. - AFP

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/abudget/Article/

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